Tens of thousands of recording artists and musicians in Germany will be receiving payment for their content under the terms of agreement struck last week between YouTube and GEMA, Germany’s leading royalty collection group.

The deal will end a seven-year YouTube ban in Germany, which had previously blocked access to the streaming site over non-payment of performance royalties. It is unclear if the pact is a harbinger of things to come in the ongoing battle between streaming sites, search engines and content providers, such as musicians, or if it includes published works, like books and photographs.

“We remained true to our position that authors should also get a fair remuneration in the digital age, despite the resistance we met,” Harald Heker, GEMA’s chief executive, said in a statement. He added that the agreement covered future royalties, as well as those accrued over the last seven years.

Blocking alert that German YouTube users will no longer see

“This is a win for music artists around the world, enabling them to reach new and existing fans in Germany, while also earning money from the advertising on their videos,” YouTube’s Christophe Muller toldTorrentFreak, a publication dedicated to bringing the latest news about copyright, privacy, and everything related to filesharing.

TorrentFreak also reports that “Increasingly, music groups are criticizing YouTube for ‘profiting’ from the hard work of artists without paying proper compensations, so it’s not unlikely that similar deals will follow in other countries.”

A prominent L.A.-based producer told IP CloseUp that the deal (which deal? The deals in other countries? “that such deals in other countries”) “appears to be progress,” but Google (which owns YouTube) is too big for the little record companies to fight. “Whenever they try collective action, Google runs to the anti trust authorities.”

Agreement that the Internet has been bad for the music business is not universal. Factors that influence “free” distribution depend on a label’s size, the popularity of its artists and their point-of-view about how best to generate income. Sony has said that impeding YouTube costs the music industry millions of dollars.

One of the people who embraces this positive view of streaming is Edgar Berger, Sony Music’s CEO of international business. In a recentinterview he stressed the importance of the Internet, while noting that the increase in Internet sales almost makes up for the decline in physical sales. See a summary of the interview, here.

“There is absolutely nothing to complain about. The Internet is a great stroke of luck for the music industry, or better: the Internet is a blessing for us,” Berger said.

No More Red Faces

“The [GEMA] deal means YouTube will unblock thousands of clips in Germany for the first time in seven years,” wrote Bloomberg News. “When German music fans in the past tried to watch videos of their favorite songs they only got an error message showing a red YouTube sad face with a line saying the content was banned from the portal for copyright reasons.”

The parties did not disclose financial details of the agreement. YouTube has, in the past, struck similar deals with dozens of groups around the world, including one in 2009 with the U.K.’s PRS for Music.

The groups also did not say if YouTube’s familiar sad red face would be replaced with a happy green one.

Taylor Swift, a pop star with sufficient power to move mountains, succeeded in moving an equally resolute object last year: Apple Music’s position on paying royalties to recording artists.

A year later it is unclear if was the musicians, Apple, or Swift who benefited the most.

A Wall Street Journal op-ed last week reminded us that there are more important things to cover other than Kardashian/West war of words that the combatants and media are jointly milking.

“In Support of Taylor Swift, Economist,“ Hong Kong based op-ed writer David Feith says,”Never mind the feud with Kanye West, the pop star has waged more important fights defending the value of intellectual property.”

The Top Earner

Forbes ranks Swift as the number one celebrity artist in 2016 with $170M in earnings. According to the magazine she is in the top 100 of self-made women and power women.

Swift has sought to champion the IP rights of recording artists by using her star power to assure that they (not she) are paid. That’s admirable, for sure, as the streaming services, Pandora, Spotify and YouTube, to name a few, have built valuable businesses without paying their fare share of artists royalties. (YouTube has been valued by Bank of America at $80 billion.)

But maybe Swift was at least somewhat motivated by dollars, not sense.

After outing Apple Music for refusing to pay artist royalties in a now infamous tumblr post, Swift wound up receiving not one but two spots from the company, promoting their new streaming service. I guess they were more interested in thanking her for the exposure than punishing her for the dis. Both ads went viral generating huge attention for Apple Music and her. Good timing, I guess.

Below is the original tumblr piece in which Swift challenged Apple – and the stream industry – to change their music rights policy. Swift won more than the argument, and so did Apple. The argument is well-stated:

“This may be the ‘information wants to be free’ era, when online content is glibly swiped by millions who would never dream of shoplifting,” said WSJ’s Feith, “but Ms. Swift has a deep appreciation for the profit motive and the fruits it bestows on society.

“Ms. Swift’s most ambitious [IP] crusade may be in China,” writes WSJ’s Feith, “where she has launched branded clothing lines with special anti-piracy mechanisms to combat rampant counterfeiting on e-commerce sites like Alibaba’s Taobao.”

Swift has been known to trademark not song or titles, but phrases from songs which can be used to build her brands and fashion portfolio.

*****

I hope that Taylor Swift invents something soon, so she can bring her loyal following and keen business instincts to patents and patent holders. They sure could use them.

Royalties from so-called legitimate Internet streaming sites, including Pandora and Spotify, pay most musicians less than a penny on a dollar of revenue generated.

In a page one article in today’s New York Times, “As Music Streaming Grows, Artists’ Royalties Slow to a Trickle,” the paper illustrates how cellist Zoe Keating received just $1,652.74 from Pandora over six months for her songs with they played more than 1.5 million times. On Spotify, wrote the Times, Keating netted just $547.71 for 131,000 plays or 0.42 per play.

The formula makes the old days of Tin Pan Alley look pretty good for struggling song writers and recording artists.

Fans need to remember that even streaming businesses like Pandora and Spotify, as opposed to Megaupload, which pays no royalties and was shut down by authorities, may be great for their personal library but not so good for musicians trying to make a living — and we’re not talking about the Adele and Rhianna.

Some say music streaming is merely a disruptive technology for delivering content people want in a manner they desire. With sufficient volume, it has been argued, royalty payments for top names will eventually catch up to where they were. Don’t bet on it.

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About Bruce Berman

Bruce is a long-time IP observer, adviser and editor, who is in close close contact with the leading owners and influencers. He tracks latest trends and developments, and monitors transactions, strategy and performance.

Since 1988 Bruce has been working with IP holders, managers and lawyers, as well as investors, to convey value to the right audiences. In 2016 he founded the Center for IP Understanding, an independent non-profit, www.understandingip.org.

Bruce is responsible for five books, including the best-seller "From Ideas to Assets." He has written The Intangible Investor column for IAM Magazine since 2003. For his full bio, visit www.brodyberman.com or click below.